IMF says progress has been made on support to Argentina
Adesola Afolabi was a businessamlive reporter and Head of Financial desk.
Christine Lagarde, the International Monetary Fund’s (IMF) managing director, has said progress has been made with Argentina on how best the Fund can support the country in the face of renewed financial volatility and a challenging economic environment, adding that “discussions will now continue on a technical level.”
The IMF released Lagarde’s remarks early Wednesday, following a meeting held Tuesday in Washington with Nicolas Dujovne, Argentina’s economy minister, and Gustavo Cañonero, its Central Bank deputy governor.
“We made progress in our meeting and we will be working together to further strengthen the Argentine authorities’ IMF-backed programme.
Our discussions will now continue at a technical level and, as stated before, our common objective is to reach a rapid conclusion to present a proposal to the IMF Executive Board,” Lagarde said.
According to the Wall Street Journal (WSJ), investors are of the view that the country must pass a sustainable budget and communicate a coherent economic strategy that goes beyond calling on the International Monetary Fund for support.
Argentina, South America’s second largest country is facing an economic crisis on the back of rising US interest rates and a resurgence of the dollar.
The predominant manufacturing country battles with inflation rate nearing 32 percent, ballooning external debt, fleeing foreign investors, a rapidly declining exchange rate, among others.
To this end the country and the IMF had in June agreed to a $50 billion credit line.
Interest rates in the country were recently raised to 60 percent to manage the crisis while the fiscal authorities are working on reducing the primary fiscal deficit to 0 percent of GDP in 2019 from a projected 2.6 percent this year.
“That will involve implementing a tax on exports, cutting the number of ministries, and reducing spending on public works projects and the government’s payroll, moves that will be politically risky as Argentina heads into an election next year,” says WSJ.
These moves were however announced as measures aimed at regaining investor confidence.